Many investigators have focused on the development of biocompatible polyurethanes by chemical reaction of functional groups contained in a spacer and introduced in the PU backbone or by a grafting method on graft polymerization of functional groups. In this study, alginate-based polyurethane (PU) composites were synthesized via step-growth polymerization by the reaction of hydroxyl-terminated polybutadiene (HTPB) and hexamethylene diisocyanate (HMDI). The polymer chains were further extended with blends of 1,4-butanediol (1,4-BDO) and alginate (ALG) with different mole ratios. The structures of the prepared PU samples were elucidated with FTIR and 1H NMR spectroscopy. The crystallinity of the prepared samples was evaluated with the help of X-ray diffraction (XRD). The XRD results reveal that the crystallinity of the PU samples increases when the concentration of alginate increases. Thermogravimetric (TGA) results show that samples containing a higher amount of alginate possess higher thermal stability. ALG-based PU composite samples show more biocompatibility and less hemolytic activity. Mechanical properties, contact angle, and water absorption (%) were also greatly affected.